Sector movers: Paper profits, grocers lose out

Paper products and telecoms were the top sectors on Tuesday, lifted by an encouraging statement from Mondi and good news for BT Group.

Mondi said it anticipated basic underlying earnings per share of 73 to 77 euro cents, up from 67.8 cents a year ago, and basic earnings per share of the same 73 to 77 cent range, well up from 60.3 cents last year.

The FTSE 100 packaging specialist also confirmed that underlying operating profit for the period would be above that of the same period last year, when it was €490m.

BT shares were dialled higher as regulator Ofcom fell short of demanding the company sell off its infrastructure arm Openreach, but instead said it should be forced to become a legally distinct company with its own board, own staff and separate branding.

Shares in BT rose as the results of the regulator's was felt to have gone easy on the former state monopoly, although did go further than BT's proposal for functional separation with independent governance.

Broker RBC Capital said that although Ofcom rejected BT's proposal in enforcing legal separation, "we see the outcome as benign for BT as it retains ownership of Openreach and the circa £1.4bn of cashflow (circa 45% of group) it provides".

"In our view Ofcom's move is proportionate to the issues involved - a full separation would not have been."

Food retailers were the big fallers on Tuesday, with Tesco, Sainsbury and Morrison all on the wane as industry data showed they lost further market share to discounters as sales dropped in the weeks following the Brexit vote.

The grocery industry as a whole, the monthly report from research firm Kantar Worldpanel showed, increase sales 0.1% in the 12 weeks to 19 July, having seen them fall 0.2% in the period to 19 June and 0.4% a month before that.

Grocery prices fell 1.4% for the period, which was the same rate of deflation as reported a month ago and the 24th consecutive fall.

Among the 'big four' supermarkets, Tesco saw sales fall the least, down 0.7%, and its 0.2% loss of market share to 28.3% was the group's slowest rate of share loss since March 2014.

Sainsbury’s sales slipped 1.1%, the second lower move in a row after a long upward streak, which dragged its market share down by 0.2 percentage points to 16.3%.

Morrisons sales fell 1.8%, which was its best results since January, while its market share fell by 0.2 percentage points to 10.7%.

Top performing sectors so far today
Forestry & Paper 16,415.55 +3.81%
Fixed Line Telecommunications 4,594.50 +3.72%
Automobiles & Parts 7,009.52 +3.42%
Industrial Metals & Mining 1,595.49 +2.40%
Mining 11,439.82 +1.84%

Bottom performing sectors so far today
Food & Drug Retailers 2,536.93 -2.02%
Real Estate Investment & Services 2,396.46 -1.41%
Mobile Telecommunications 5,239.95 -0.66%
General Retailers 2,473.28 -0.57%
Media 7,463.19 -0.45%